This site is about everything digital, giving an update on new things as I learn

Tag: lean

Since venture capitalist Marc Andreessen introduced the concept of “product / market fit” back in 2007 there have been many different interpretations of what this concept actually means. From people using sales projections to companies applying customer satisfaction to determine product / market fit, I’ve seen companies utilising different yardsticks. I therefore thought it would be good to go back to Marc Andreessen’s original definition and look at a great approach by Sean Ellis – who specialises in growth strategies – to identify product / market fit.

“Product/market fit means being in a good market with a product that can satisfy that market.”

Andreessen has taken this definition from Andy Rachleff – another successful startup founder and venture capitalist – who describes getting to product / market fit as “the only thing that matters” when you’re a startup. Product / market fit thus means being in a good market with a product that can satisfy that market.

The million dollar question then becomes how one knows that product / market fit has been achieved. Andreessen explains how you can feel when product / market for isn’t happening:

Andreessen argues that you can feel when product / market fit is happening if:

“The customers are buying the product just as fast as you can make it – or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it.”

Ellis’ rule of thumb is that if you’re above 40% of the people saying they’d be very disappointed, you’ve found product / market fit, and if you’re less than that, you haven’t.

Through the survey, you can learn about a person’s underlying reasoning behind their response by including a free text field which says something like “Please help us understand why you’ve selected this answer.”

In addition, you could conduct user interviews to learn more about the products which people consider as an alternative to your product or to understand the perceived benefits of your product. For example, those survey respondents who responded that they’d be “somewhat disappointed” it might be that you haven’t delivered on the product’s intended value proposition. Similarly, it would be good to find out from those people who indicated “not disappointed” why they wouldn’t care if your product ceases to exist.

Main learning point: Understanding whether (and why) your product has achieved product / market fit is critical for any startup. Learning why a product has or hasn’t achieved product / market fit through a survey or an interview will fuel further product development and decision making.

“High Output Management” by the late Andrew Grove, ex Chairman and CEO of Intel, is a must read management book in my opinion. It’s easy to be quite cynical about most management and business books as a lot of them seem to introduce one central theme (or buzzword) right at the beginning of the book, followed by endless repetition throughout the remainder of the book …

In contrast, “High Output Management” contains valuable advice and tips from the beginning right to the end of the book. First published back in 1983, the book applies production principles to management. Some of these principles really resonated with me and I feel strongly about all (product) managers benefiting from these principles as part of their day-to-day working practices:

Identifying the “limiting step” – Grove defines the “limiting step” as the step in the overall shape of the production flow that will determine the overall shape of a company’s operations. In the book, Grove uses the simple example of a breakfast company, and highlights the time required to boil an egg is the critical component or the ‘limiting step’ in the production flow (see Fig. 1 below). The key idea here is to construct your production flow by starting with the longest (or most difficult, or most sensitive, or most expensive) step and work our way back. As a (product) manager you’ll thus focus on the limiting step within your context, e.g. in the workflow of your team, the customer funnel or the decision-making process.

Detect and fix issues at the “lowest-value stage” possible – If there’s a problem with your product, you want to find out about it as early on in the production process as possible so that you can minimise risk. In the production world, I witnessed lowest-value stage thinking first hand at the assembly line of a Toyota factory. Here, employees can pull the “Andon” cord to (temporarily) bring things to a halt as soon as they come across an issue. It’s an easy way of escalating things, making sure that a problem or bottleneck is dealt with before proceeding with the rest of the assembly process. Think about when you last pulled an imaginary Andon cord to flag a product or team issue early!?

Using (leading) indicators to measure and predict – In order to run a production process well you’ll need a set of indicators which help you monitor and improve the efficiency of the production line. Grove stresses that for these indicators to be useful, “you have to focus each indicator on a specific operational goal.” He goes on to list a number of relevant production indicators (see Fig. 3 below). Leading indicators give you one way to look inside the production process by showing you in advance what the future might look like.

Leverage – Grove introduces the concept of “leverage”. This is the output generated by a specific type of work activity. An activity with high leverage will generate a high level of output; an activity with low leverage, a low level of output. This raises the question about what qualifies as managerial leverage and output. Grove’s distinction between activities and output really helps to bring the concept of leverage to life (see Fig. 4 below). The overarching idea is that with each activity that the manager performs, the organisational output should increase.

A manager’s output is the output of all of the people and the teams that report into her. For example, if someone manages a design team, then his output consists of completed designs that are ready to be implemented. That output can take many different forms depending on the type of role and industry. Regardless of the form of output, managers must measure its quantity and quality:

A manager’s output = The output of his organisation + The output of the neighbouring organisations under his influence

High leverage activities – We’ve already touched on the impact of highly leveraged activities on an organisation’s output, and Grove explains how these activities can be achieved (see Fig. 5 below). For example, to maximise the leverage of his or her activities, a manager must keep timeliness firmly in mind. Equally, managers micro-managing or ‘meddling’ are examples of negative leverage activities. A big part of a manager’s work is to supply information and know-how, and to share a sense of the preferred method of handling things to the teams under his control or influence. A manager also makes and helps to make decisions.

When a person’s activity or behaviour over a long period of time is affected by a manager’s, well focused-set of words or actions.

When a large group’s work is affected by an individual supplying a unique, key piece of knowledge or information.

Applying production principles to management – In the book, Grove rightly points out how time management techniques are commonly used to improve managerial output. He then uses production principles to improve on some of these time management techniques (see Fig. 6 below).

Identify our limiting step: determine which things that have to happen on a schedule that’s absolute, and which can’t be moved. You can then plan more flexible activities around it and thus work more efficiently.

Batchingsimilar tasks: group similar activities, e.g. performance reviews, as these activities tend to require (mental) set-up time. You can thus maximise the set-up time needed for the task and reduce duplication of effort.

Forecasting your activities: Your calendar can be a valuable production-planning tool (and not a dumping ground for random meetings or “orders” by others). If you want to use your calendar as better forecasting and planning tools, Grove suggest that two conditions should be met. Firstly, you should move toward the active use of your calendar, taking the initiative to fill the holes between the time-critical events with non-time critical though necessary activities. Secondly, you should say “no” at the outset to work beyond your capacity to handle.

Meetings, the output of managerial work – A lot of managerial tasks (see “High leverage activities” above) are best suited for face-to-face interactions, and more often than not, for meetings. Grove provides a useful distinction between two basic kinds of meetings: process-oriented and mission-oriented meetings (see Fig. 7 below). I love how at the end of the book’s chapter about meetings, Grove reminds us of a quote by the late management guru Peter Drucker who said that “If people spend more than 25 percent of their time in meetings, it’s a sign of malorganisation.”

Process-oriented meetings: Knowledge is shared and information is exchanged during process-oriented meetings, which take place on a regular, scheduled basis. One-on-ones and team meetings are good examples of process-oriented meetings.

Mission-oriented meetings: The purpose of mission-oriented meetings is to solve a specific problem and often produce a decision. These meetings are ad hoc affairs, not scheduled long in advance, because they usually can’t be. The key to the success of a mission-oriented meeting is what the chair of the meeting does. The person leading the meeting needs to have a clear understanding of the meeting’s objective – what needs to happen and what decision needs to be made.

Planning: today’s actions for tomorrow’s output – In High Output Management, Grove offers three simple steps of a planning process (see Fig. 8 below). He describes planning as an ordinary everyday activity, something we all do – both in our professional and personal lives. The planning process enables you to reflect on what’s needed, the gap with the current situation and the specific actions necessary to close the gap.

Step 1 – Establish projected need or demand: What will the environment demand from you, your business, or your organisation?

Step 2 – Established your present status: What are you producing now? What will you be producing as your projects in the pipeline are completed?

Step 3 – Compare and reconcile steps 1 and 2: What more (or less) do you need to do to produce what your environment will demand?

Main learning point: “High Output Management” is probably one of the most valuable management books I’ve read in the last couple of years. If you’re looking for an inspiring but practical book about management, I suggest you look no further: High Output Management is the book for you!

“Build it and they will come!” I used to work once with a senior executive, who was of the opinion that a product or feature should just be launched, without any testing with customers beforehand. “I know that once it’s out there, people will want it” she’d explain to me, adding that “it’s what people want”.

Hearing this “build it and they will come” mantra time and time again did annoy me 🙂 At the same time, it did make me wonder whether it might be a good idea to (continuously) release product features without prior customer discovery … What if this executive is right and any new product, feature or service should just be launched, as a way of learning as quickly as possible!?

Being able to ‘launch and learn’ is a vital tool in any product person’s toolkit. I strongly encourage you to avoid ‘one-off product releases’ at any time; what are you going to learn from shipping a product only to then move on to the next thing!? One can debate about when to best learn – should you learn pre-release? – but the main point is that you’ll need to ship early and often to learn continuously.

“We do the best job we know how to do and then we launch it into the market.”

“The market will tell us the truth.”

Fried and Heinemeier Hansson argue that anything you ask or test with customers prior to launch is hypothetical: “Real answers are uncovered when someone’s motivated enough to buy your product and use it in their own environment – and of their own volition. Anything else is simulated answers. Shipping real products gives you real answers.” Whilst I do agree with this line of thinking, I don’t believe in simply launching some crappy product or feature and see if it sticks (just as much I don’t believe in “build it and they will come”).

My suggestion would to ‘launch confidently and learn’. This means that for each new product or feature you determine – based on your confidence level – whether it needs some form of customer research before launch:

Deliver value in order to learn – You want to be smart about the things you want to learn. The best opportunity to learn comes when you’re confident about the value that you’re delivering to the customer. Naturally, people might not buy or use your product despite the value it intends to deliver, but that’s a learning in itself.

Minimum Level of Confidence (1) – How confident are you? What exactly are you confident about (and why)? The main reason why I believe in product managers adhering to a confidence treshold is to avoid launching products that don’t work or provide an awful user experience. The Newton MessagePad which came out in 1993 is a good example of the launch of an incomplete product, which didn’t live up to its promise. Larry Tesler, senior exec at Apple at the time of of the Newton MessagePad, described Apple’s promise about the Newton’s handwriting capability as a large nail in the Newton coffin. The lesson learned here is that you shouldn’t launch when you’re not confident about the capability and value of your product or feature.

Minimum Level of Confidence (2) – I’ve come up with a number of basic questions and criteria to apply when you’re thinking of launching a product (see Fig. 1-2 below). In my experience, identifying your Minimum Level of Confidence shouldn’t result in ‘analysis paralysis’. In contrast, it’s an important conversation to have throughout the product lifecycle to ensure that everyone fully understands what risks or unknowns are associated with the upcoming release. As an outcome of such a conversation you can decide whether to get customer feedback pre-release.

Fig. 1 – Questions and criteria to check your confidence about launching a product or feature:

Internal quality assurance – Have you tested your product feature to ensure there are no obvious bugs or gaps in the user experience? Even if you don’t test with customers prior to launch, you should test some key acceptance scenarios internally before launch to make sure the product works as intended.

How confident are you? – The combination of low confidence in something which your business has got a lot riding can be deadly. Yes, one can always try to do damage limitation, but it might already be too late at the time of you trying to repair things! The idea behind determining your confidence levels upfront isn’t a scientific one. Instead, it enables a conversation, making sure that people have got their eyes wide open and understand the level of risk and unknowns involved in an upcoming product launch (see Fig. 2 below).

Fig. 2 – Basic confidence levels to consider before launch:

High Confidence: Our confidence in the upcoming release is high because we tested it thoroughly internally, have launched a similar product or feature before or if there’s an issue the fallout will be small.

Low Confidence: Our confidence in the upcoming release is low because we haven’t fully tested it, it’s based on new technology or creates a totally new user experience.

Main learning point: Even if you decide not to generate customer learnings before a product launch, make sure you at learn after launch. Launch and learn. Don’t launch without learning!

Christina Wodtke’s latest book, “Radical Focus”, is probably the most valuable ‘business’ book which I’ve read thus far this year. The full title of the book reads “Radical Focus – Achieving Your Most Important Goals with Objectives and Key Results” and Wodtke provides a great story – literally – as well as useful tips about the importance of goal setting. The book starts with a fable about a Silicon Valley startup, and offers a good narrative about how (not) to use of objectives and key results (‘OKRs’). This fable, which felt very close to the reality of being in startups – sets the scene for the practical tips that Wodtke offers with respect to using OKRs effectively, irrespective of whether you work in a startup or at Amazon.

What are some of the most common reasons why key things don’t happen? Wodtke offers a number of insights here:

No prioritisation or stack ranking of goals – Everything is deemed important and critical things don’t get done as a result.

No obsessive and comprehensive communication of the goal – Wodtke suggests that for key goals to be achieved, it’s important to reiterate the goal daily and having regular commitment meetings, where the team talks about the key goal and commit to specific activities directly related to the goal.

There’s no plan to get things done – Often, companies will have lofty goals but no plan or process to actually achieve these goals. Wodtke introduces a number of useful ceremonies which teams can use to keep goals relevant and top of mind: commitment meetings, check ins and celebrations.

No or insufficient time carved for what really matters – Love how Wodtke refers to the “Eisenhower Box” which helps identify and prioritise those things that must be done (see Fig. 1 below).

A tendency to give up instead of iterating – Business often give up at the first attempt, canning a goal if it isn’t achieved (fully) first time around. Instead, Wodtke urges, try to avoid a lack of followthrough by iterating constantly.

As the book title clearly suggests, Wodtke advocates the use of OKRs to achieve focus and making sure that key goals are being realised:

Objectives are bold and qualitative – Set a bold, inspirational and qualitative Objective each quarter. Wodtke provides examples of both good and poor Objectives (see Fig. 2 below).

Key Results are tangible and quantitative – Each Objective will have three quantitative Results that let you know when you’ve hit your Objective (see Fig. 3 below). Wodtke stresses that Key Results are “hard goals, the kind where you only have a 50/50 shot of achieving.” These ‘stretch goals’ are hard to achieve but not impossible, and you indicate for each Key Result how confident you are of achieving it.

OKRs and health metrics – In the book, Wodtke makes a helpful distinction between OKRs and health metrics. OKRs are “the thing you want to push, the one thing you want to make better.” I’d add an emphasis on the word “one” here as I find working with a single business Objective to be most effective. In my experience, having multiple business Objectives starts muddying the water in terms of focus and prioritisation. Instead, start with setting one Objective for the company. Secondly, set OKRs for each team that ty back to the company goal. Health metrics are the key things to continue to watch, these metrics are more concerned with ‘hygiene’.

Set OKRs together, pick Key Results as a team – Identifying and agreeing on Objectives and Key Results is a collaborative process. Clearly articulating and sharing the business Objective is a critical first step. The different teams can then set those Key Results which they believe will contribute to the business Objective.

Progress monitoring – I particularly liked the 4×4 matrix that Wodtke suggests as a way of monitoring progress with respect to achieving your business and associated team OKRs (see Fig. 4 below). This matrix is a very simple but effective way of committing to (weekly) priorities and capturing progress.

Setting a rhythm of execution – Wodtke introduces a number of weekly ceremonies which you can use to keep OKRs relevant and to ensure that you keep to them (see Fig. 5 below). The risk with goal setting is that it remains a one off exercise and I believe that having weekly ‘commitment’ and ‘win’ sessions will help massively keeping OKRs front of mind.

Main learning point: In “Radical Focus”, Christina Wodtke does a great job of explaining the role and value of OKRs. Not only does she provide valuable tips on how to best define OKRs, Wodtke also offers useful methods of keeping track of progress against OKRs. If you feel that you and your business are doing too much of everything, or not achieving anything, then Radical Focus is a must read!

Each Monday, the team should meet to check in on progress against OKRs, and commit to the tasks that will help the company meet its Objective.

Intention for the week – What are the 3-4 most important things you must get done this week toward the Objective? Discuss if these priorities will get you closer to the OKRs.

Forecast for the month – What should your team know is coming up that they can help with or prepare for?

Status toward OKRs – If you set a confidence of five out of ten, has that moved up or down? Have a discussion about why.

Health metrics – Pick two things you want to protect as you strive toward greatness. What can you not afford to eff-up? Key relationships with customers? Code stability? Team well-being? Now mark when things start to go sideways, and discuss it.

The objective is designed to get people jumping out of bed in the morning with excitement. And while CEOs and VCs may jump out of bed in the morning with joy over a 3% gain in conversion, most mere mortals get excited by a sense of meaning and progress. Use the language of your team.

Time Bound

For example, doable in a month, a quarter. You want it to be a clear sprint toward a goal. If it takes a year, your Objective maybe a strategy or even a mission.

Actionable by the Team Independently

This is less of a problem for startups, but bigger companies often struggle because of interdependence. Your Objective has to be truly yours, and you can’t have the excuse of “Marketing didn’t market it.”

An Objective is like a mission statement, only for a shorter period of time. A great objective inspires the team, is hard (but not impossible) to do in a set time frame, and can be done by the person or people who have set it, independently.

Last Friday, I attended a talk by Uri Levine, Co-Founder of Waze, a community-based traffic and navigation app that was sold to Google for $1.1 billion. In a two-hour session, Uri shared some of his key learnings from the Waze startup journey; from starting from scratch to a successful exit. I felt that his talk was packed with valuable insights, and I’ve selected some key ones to share:

Focus on the problem – I loved how Uri concentrated on the problem that you’re looking to solve. He talked about problem solving being a key driver for him and the different startups that he’s (been) involved in. For example, Waze originated from Uri’s frustration with traffic jams … Uri then talked us through the “Adjusted Startup Curve” to illustrate the typical journey of a startup, starting with a problem to solve (see Fig. 1).

Don’t be afraid to fail – I always find it incredibly refreshing when other people speak openly about failures and not being afraid to fail. As Uri rightly pointed out, the fear to fail (and therefore not trying) is a failure in itself (see Fig. 2). He was also keen to stress that creating and managing a startup is never a linear, upward journey. By contrast, you effectively go from failure to failure, but you might win in the end – if you’re lucky that is (see Fig. 3).

Passion for change – Uri’s points about entrepreneurs and their passion for change really resonated with me. I’m not an entrepreneur, but I feel that I’ve got some innate restlessness which is usually fed by change, learning and trying new things. It was interesting hearing Uri talk about how this passion usually doesn’t sit with well with fear of failure or loss. “Move fast and break things” was one of Uri’s mantras in this regard.

Honest validation of your ideas – As an entrepreneur, Uri explained, you need to fall in love with your idea. However, he also highlighted the importance of being able to critically assess your own idea. He suggested asking yourself “who will be out of business if I succeed?” If you don’t know the answer to this question, Uri explained, your idea probably isn’t big enough.

Iterate based on user feedback – Uri reminded me of the mighty David Cancel as David is also very focused on solving customer problems and listening to customer feedback (see Fig. 4). Like David, Uri didn’t get overly zealous about Agile or lean development methods. Instead, Uri talked about constantly iterating a product or service based on customer feedback.

Main learning point: I found Uri Levine’s talk hugely inspiring; he was honest about the challenges involved in creating or working at a startup whilst at the same encouraging us to solve problems and try things.

A few weeks ago, I listened to a podcast interview in which Christophe Gillet, VP of Product Management at Vimeo, gave some great pointers on how to best assess market viability. Christophe shared his thoughts on things to explore when considering market viability. I’ve added my sample questions related to some of the points that Christophe made:

Is there a market? – This should be the first validation in my opinion; is there a demand for my product or service? Which market void will our product help to fill and why? What are the characteristics of my target market?

Is there viability within that market? –Once you’ve established that there’s a potential market for your product, this doesn’t automatically mean that the market is viable. For example, regulatory constraints can make it hard to launch or properly establish your product in a market.

Total addressable market – The total addressable market – or total available market – is all about revenue opportunity available for a particular product or service (see Fig. 1 below). A way to work out the total addressable market is to first define total market space and then look at percentage of the market which has already been served.

Understand prior failures (by competitors) – I’ve found that looking at previous competitor attempts can be an easy thing to overlook. However, understanding who already tried to conquer your market of choice and whether they’ve been successful can help you avoid some pitfalls that others encountered before you.

Strong mission statement and objectives of what you’re looking to achieve –In my experience, having a clear mission statement helps to articulate and communicate what it is that you’re looking to achieve and why. These mission statements are typically quite aspirational but should offer a good insight into your aspirations for a particular market (see the example of outdoor clothing company Patagonia in Fig. 2 below).

Business goals –Having clear, measurable objectives in place to achieve in relation to a new market that you’re considering is absolutely critical. In my view, there’s nothing worse than looking at new markets without a clear definition of what market success looks like and why.

How to get people to use your product – I really liked how Christophe spoke about the need to think about a promotion and an adoption strategy. Too often, I encounter a ‘build it and they will come’ kind of mentality which I believe can be deadly if you’re looking to enter new markets. Having a clear go-to-market strategy is almost just as important as developing a great product or service. What’s the point of an awesome product that no one knows about or doesn’t know where to get!?

Main learning point: Listening to the interview with Christophe Gillet reinforced for me the importance of being able to assess market viability. Being able to ask and explore some critical questions when considering new markets will help avoid failed launches or at least gain a shared understanding of what market success will look like.

The fifth and final day of the sprint is all about interviewing your (target) customers and learning from how they interact with your prototype.

Interview

“Five is the magic number”, is the point that Knapp, Zeratsky and Kowitz are making in Sprint with regard to the number of people to interview. The value of this number of interviewees was proven by usability expert Norman Nielsen who found that typically 85 percent of problems were observed after just five people (see Fig. 1). “The number of findings quickly reaches the point diminishing returns,” Nielsen concluded. “There’s little additional benefit to running more than five people through the same study; ROI drops like a stone.”

When it comes to conducting the actual interview, having a structured and consistent way of running these conversations is critical. Knapp, Zeratsky and Kowitz write about the “Five-Act Interview”, which consists of the following stages (see Sprint, p. 202):

A friendly welcome to start the interview

A series of general, open-ended context questions about the interview

Introduction to the prototype(s)

Detailed tasks to get the customer reacting to the prototype

A quick debrief to capture the customer’s overarching thoughts and impressions

The book also provides some useful tips for the interviewer, asking open-ended and ‘broken’ questions (pp. 212 – 215):

Ask broken questions – The idea behind a broken question is to start asking a question – but let your speech trail off before you say anything that could bias or influence the answer. For example: “So, what … is …” (trail off into silence)

Learn

Ultimately, this is what the fifth and final day of your sprint is all about: finding the end to your sprint story. Once you’ve had a chance to see how your customers react to your prototype, you’ll be able to answer your sprint questions and decide on next steps. For example, if you and your team take interview notes as a group during the five interviews, you should be able to do a good recap of all your learnings, answer the original sprint questions and decide on what to next. For example, a common next step would be to make a go/no go decision about a particular product idea.

Main learning point: In “Sprint”, Knapp, Zeratsky and Kowitz offer a very cost-efficient way to explore product questions and solutions before committing to an idea (and a large investment of time, money and effort). The reality is that as a product manager you’ll almost always will have to take a punt, but being disciplined about doing sprints and continuous discovery will help you make better informed decisions, based on real customer feedback.